Café operators penalised $110,000 for paying international students just $8 an hour

2 February 2015

The operators of a café in Melbourne have been fined a total of $110,500 after paying young, foreign students as little as $8 an hour.

The owner-operators of the Gloria Jeans franchise at Caulfield - Tsinman Fu, of Clayton and Ping Ostrovskih, of Rowville – have been penalised $17,500 and $13,000 respectively.

The Federal Circuit Court has also imposed a further $80,000 penalty against their company, Primeage Pty Ltd.

The fines are the result of legal action by the Fair Work Ombudsman, which investigated a complaint from an employee.

Fair Work inspectors found that 22 casual employees at Gloria Jeans Caulfield had been paid flat rates of $8 to $10 an hour, leading to them being underpaid a total of $83,566 between July, 2011 and April, 2013.

Many of the underpaid workers were international students from non-English speaking backgrounds – a third of them aged under 21.

Individual underpayments ranged from $219 to $17,103.

The employees were back-paid only after the Fair Work Ombudsman commenced its legal proceedings.

In his judgment on the case, Judge Grant Riethmuller noted that inspectors had previously found that another company operated by Fu and Ostrovskih had underpaid an employee’s entitlements.

Judge Riethmuller said that previous conduct would have ensured Fu and Ostrovskih were “well aware of their obligations and the seriousness of those obligations” - and their failure to implement a proper pay system showed “at best a reckless disregard of the obligations”.

The Court found Fu’s actions with respect to the underpayments were deliberate, observing that a “conscious decision was made to reduce wages when the business was not producing a sufficient income.”

Judge Riethmuller said the impact on the employees had been significant and general deterrence was important, with the restaurant and hospitality industry having been recognised as “notorious for non-compliance”.

The Court dismissed submissions from Fu and Ostrovskih that the employees did not express any dissatisfaction in relation to their entitlements prior to the Fair Work Ombudsman’s intervention.

“It is common for employees, particularly in industries where pay rates are low and workforces are largely casual, to be wary of expressing any dissatisfaction for fear that their employment will not continue,” Judge Riethmuller said.

Fair Work Ombudsman Natalie James says the Agency made repeated requests for the employer to back-pay the employees before commencing legal action.

Ms James says the Court’s decision sends a message to others that blatantly underpaying minimum entitlements is a serious matter and will not be tolerated.

“We treat underpayments of young and overseas workers particularly seriously because they can be vulnerable if they are not fully aware of their workplace rights or are reluctant to complain,” she said.

“Successful litigations such as this also benefit employers who are complying with workplace laws, because it helps them to compete on a level playing field.”

Employers and employees seeking advice or assistance should visit the website at www.fairwork.gov.au or contact the Fair Work Infoline on 13 13 94. A free interpreter service is available by calling 13 14 50.

Information to assist people from culturally and linguistically diverse backgrounds has been translated into 27 languages.

The Fair Work Ombudsman has fact sheets tailored to overseas workers and international students on its website.

The Agency has also produced videos in 14 languages and posted them on YouTube to assist overseas workers understand their workplace rights in Australia.

Ms James says the Fair Work Ombudsman can also assist employers with practical advice that is easy to access, understand and apply.

Online tools include PayCheck Plus for calculating the correct wages for employees, fact sheets, Best Practice Guides and templates for pay slips and time-and-wages records.

Underpinning the Fair Work Ombudsman’s website tools and resources is its award-winning Small Business Helpline, where employers can get advice they can rely on with confidence.

The Fair Work Ombudsman is committed to providing advice that you can rely on. The information contained on this website is general in nature. If you are unsure about how it applies to your situation you can call our Infoline on 13 13 94 or speak with a union, industry association or workplace relations professional. Visitors are warned that this site may inadvertently contain names or pictures of Aboriginal and Torres Strait Islander people who have recently died.